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The still simmering labor dispute over unpaid salaries in local authorities threatens to erupt into a massive strike by 700,000 civil service workers on Wednesday unless a resolution is reached, beginning with negotiations tonight.

Finance Minister Abraham Hirchson, Interior Minister Roni Bar-On and Histadrut labor federation chair Ofer Eini plan to meet tonight at Hirchson's office.

Prime Minister Ehud Olmert promised two weeks ago to intervene personally to bring the crisis to a conclusion, and the government recently debated the issue for the first time. Olmert's announcement met a Histadrut demand that allowed Eini to call off a planned strike two weeks ago.

The strike would shut down ministries, local authorities, government companies, the National Insurance Institute and the Employment Service if the current wage crisis is not resolved by then. Employees of various municipalities, local authorities, and religious councils have not received salaries for weeks or months.

Treasury and Interior Ministry officials said the number of civil servants who haven't been paid has decreased steadily as the government made financial arrangements with debt-ridden authorities.

The National Labor Court, headed by President Steven Adler, has also acknowledged the number has decreased dramatically compared to 2004. Still, Adler added the problem of withholding salaries in local authorities is far from solved.

Histadrut officials claim that although the number of unpaid workers decreased in the past year, it began climbing again in last month. An additional problem, the Histadrut points out, is that authorities are not paying into workers' pension and provident funds, even though money for these funds is deducted from worker salaries. The Histadrut argues this act constitutes a criminal offense.